Bank­ing sec­tor de­posits up 5,2% HY in­crease of $5,9bn Up­ward tra­jec­tory since 2009

Chronicle (Zimbabwe) - - Business Chronicle - Oliver Kazunga Se­nior Busi­ness Re­porter

TO­TAL bank­ing sec­tor de­posits in Zim­babwe in­creased by 5.2 per­cent to $5.9 bil­lion as at end of June this year, the Re­serve Bank of Zim­babwe (RBZ) said yes­ter­day.

Pre­sent­ing the Mid-Term Mone­tary Pol­icy state­ment, the cen­tral bank Gover­nor, Dr John Man­gudya, said since the in­tro­duc­tion of a multi-cur­rency sys­tem in Fe­bru­ary 2009, bank de­posits have been on an up­ward growth tra­jec­tory grow­ing from $705,76 mil­lion as at June 30, 2009 to close to $6 bil­lion.

“To­tal bank­ing sec­tor de­posits in­creased by 5.2 per­cent to 5.9 bil­lion as at June 30, 2016, from $5.6 bil­lion as at De­cem­ber 31, 2015,” said Dr Man­gudya.

He in­di­cated that de­mand de­posits con­sti­tuted 50,75 per­cent of the to­tal de­posits as at June 30, 2016 fol­lowed by time de­posits at 22,33 per­cent.

In­ter­bank de­posits con­sti­tuted 12,50 per­cent, sav­ings de­posits were at 5,84 per­cent while for­eign and other de­posits con­sti­tuted 5,20 per­cent and 3,37 per­cent re­spec­tively.

“Dur­ing the pe­riod Jan­uary to June 2016, how­ever, the bank­ing sec­tor was ex­posed to cash short­ages largely as a re­sult of macro-eco­nomic chal­lenges fac­ing the coun­try, in­clud­ing lack of fis­cal space and the cur­rent ac­count deficit,” he said.

Dr Man­gudya said dur­ing the pe­riod un­der re­view, the bank­ing sec­tor av­er­age pru­den­tial liq­uid­ity ra­tio stood at 52.47 per­cent and was above the reg­u­la­tory min­i­mum re­quire­ment of 30 per­cent.

“Eigh­teen banks were com­pli­ant with the pru­den­tial liq­uid­ity ra­tio as at 30 June 2016. Not­with­stand­ing the high av­er­age pru­den­tial liq­uid­ity ra­tio, the bank­ing sec­tor has been ex­pe­ri­enc­ing cash chal­lenges.

“The wors­en­ing trade deficit and an in­cli­na­tion to­wards hold­ing and ex­ter­nal­is­ing phys­i­cal cash have con­tin­ued to drain cash from the econ­omy, and the ad­verse ef­fects are trans­ferred to the bank­ing sec­tor man­i­fest­ing in cash short­ages at bank­ing in­sti­tu­tions,” he added.

In re­sponse to liq­uid­ity con­straints, Dr Man­gudya said the Re­serve Bank adopted a num­ber of pol­icy mea­sures to ame­lio­rate the cash chal­lenges in­clud­ing im­port­ing cash, the pro­mo­tion of the us­age of plas­tic money as well as the use of other currencies within the multi-cur­rency bas­ket and cash with­drawal lim­its.

“Bank­ing sec­tor loans and ad­vances de­clined from $4 bil­lion as at 30 June 2015 to $3.7 bil­lion as at 30 June 2016, largely as a re­sult of cau­tious and pru­dent lend­ing mea­sures by bank­ing in­sti­tu­tions in re­sponse to the op­er­at­ing en­vi­ron­ment that re­quires banks to con­tain for­eign ex­change in­duced de­mand pres­sures at­trib­ut­able to lend­ing ac­tiv­i­ties,” said the Gover­nor.

He said the dis­posal of non-per­form­ing loans to the Zim­babwe As­set Man­age­ment Com­pany (Zamco) had also sig­nif­i­cantly con­trib­uted to the re­duc­tion in the banks’ loan port­fo­lios.

Dr Man­gudya said lend­ing to in­di­vid­u­als, man­u­fac­tur­ing and agri­cul­ture con­tin­ued to dom­i­nate the bank­ing sec­tor loan port­fo­lio dur­ing the first half.

On Non-Per­form­ing Loans, he said, there has been an im­prove­ment to 10.05 per­cent as at 30 June 2016, from 10.82 per­cent as at De­cem­ber 31, 2015.

In terms of cap­i­tal­i­sa­tion, the bank­ing sec­tor’s ag­gre­gate core cap­i­tal in­creased by 5.80 per­cent from $982.50 mil­lion as at 31 De­cem­ber 2015 to $1.04 bil­lion in the first half on the back of im­proved earn­ings per­for­mance. — @okazunga

Re­serve Bank of Zim­babwe Gover­nor, Dr John Man­gudya presents the MidTerm Mone­tary Pol­icy state­ment yes­ter­day

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